Novo Nordisk, the company that makes the popular drugs Ozempic and Wegovy, is facing tough questions from US lawmakers.
Senator Bernie Sanders recently led a hearing asking why these medicines cost so much more in the United States than in other countries. Sanders showed charts comparing prices, and the difference was shocking.
Novo Nordisk CEO Questioned Over Ozempic, Wegovy Prices
In the US, Ozempic costs $969 per month, but in places like Germany, it's only $59. Wegovy, a weight-loss drug, costs $1,349 per month in the US, but in Denmark, it's just $186.
Sanders asked Novo Nordisk's CEO, Lars Fruergaard Jørgensen, to explain why Americans pay so much more. Sanders said, "Nobody here is asking Novo Nordisk to provide charity to the American people."
Jørgensen explained that most Americans with insurance don't pay the full price. He said that 80% of people in the US who use Ozempic or Wegovy actually pay $25 or less per month because insurance helps cover the costs.
He added that drug prices in the US are complicated because of how the healthcare system works. Insurance companies and groups called pharmacy benefit managers (PBMs) help decide what people actually pay.
Jørgensen said that Ozempic, a drug for diabetes, is covered by most private health insurance plans, as well as Medicare and Medicaid, which help older people and low-income families. Wegovy is covered by about half of private health insurance companies, Medicaid in 20 states, and the Department of Veterans Affairs.
One of the reasons Jørgensen gave for the high prices was the amount of money the company spends to develop new drugs. Novo Nordisk has spent more than $30 billion to make more of these medicines and fix supply shortages.
He explained that creating new drugs can take many years, and not all drugs make it to the market. That's why successful drugs like Ozempic and Wegovy have to cover not just their own costs, but also the costs of the ones that fail.
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Study Reveals Weight Loss Drugs Costs Are Lower
However, critics of the company's pricing said the actual cost to make these drugs is much lower. A study by Yale University showed that these drugs could be made for less than $5 a month. Jørgensen responded by saying that the study didn't take into account the money spent on research and testing, or the cost of building factories to make the drugs.
The hearing also talked a lot about pharmacy benefit managers, or PBMs. These are companies that work between drugmakers and insurance companies to help decide which drugs get covered and how much people pay for them, according to The Washington Post.
Jørgensen said PBMs sometimes block cheaper drugs from being available to patients because they don't make as much profit from them. He explained that lowering the list price of a drug doesn't always mean patients will pay less, because PBMs might still choose not to cover the drug.
Some senators, like Sen. Roger Marshall, agreed with Jørgensen, saying that PBMs, not drug companies, are the real problem when it comes to high prices. Marshall, who is a doctor, even said that Novo Nordisk was more of a "hero" for creating such helpful medicines.
During the hearing, Sanders and other senators asked Jørgensen if he would lower the prices of Ozempic and Wegovy in the US if PBMs guaranteed better access to the drugs. Jørgensen said he would be open to talking about lowering prices, but he wanted to make sure patients would really get the savings.
As demand for these drugs continues to grow, Novo Nordisk and its main competitor, Eli Lilly, have become two of the most valuable drug companies in the world. However, the high prices in the US are still a big concern, especially with Medicare now allowed to negotiate drug prices for the first time under a new law.
Related Article: Novo Nordisk Predicts Ozempic's Inclusion in Medicare Drug Price Talks by 2027
